PETALING JAYA: Analysts remain positive on AME Real Estate Investment Trust
(AME-REIT), viewing its future growth as increasingly tied to Johor’s industrial expansion and the long-term spillover from the Johor-Singapore Special Economic Zone (JS-SEZ).
RHB Research maintained its “buy” call with a target price of RM1.95, saying the REIT’s growth outlook remains supported by resilient fundamentals, near-full occupancy and a visible pipeline for acquisitions.
It noted that AME-REIT’s financial year 2026 (FY26) core earnings of RM44.3mil, up 13% year-on-year (y-o-y), came largely within expectations, underpinned by contributions from newly acquired assets and sustained rental reversions.
The research house said the REIT continues to stand out for its 100% occupancy rate, which provides earnings visibility while allowing room for rental upside as older leases signed at lower rates are progressively repriced.
“We remain positive on AME-REIT’s growth outlook, supported by resilient underlying fundamentals and continued inorganic expansion,” RHB Research said.
It added that occupancy is expected to remain near full as demand for industrial space in Johor stays firm despite external uncertainties.
Moreover, it pointed out that management has guided for rental increases of between 10% and 20% every three years, while analysts said current leases still offer mark-to-market upside as renewals catch up with prevailing industrial rental rates.
Kenanga Research similarly sees future growth anchored by acquisitions and stronger lease renewals.
It said AME-REIT is targeting cumulative acquisitions of up to RM1bil by 2027, sourced either from its sponsor or the open market, with one newly injected asset and another ongoing transaction expected to lift FY27 net profit by RM1.2mil.
“Looking forward, AME-REIT’s future growth will be anchored by future acquisitions and an increasing rate of rental reversions to approximately double-digit as leases renew at higher market rates,” Kenanga Research said.
For FY26, revenue rose 22% to RM62.3mil, driven mainly by six newly acquired industrial properties completed over the past 12 months.
Its net profit grew by 16% as higher financing costs from acquisition borrowings partially capped earnings expansion.
RHB Research noted gearing increased to about 29% from 23% a year earlier after debt-funded acquisitions, but this remains manageable, with roughly RM215mil headroom for further inorganic growth.
“Management plans to gradually rebalance its debt mix towards 20% to 30% fixed-rate borrowings (currently 100% floating) by the third quarter of calendar year 2026, which should provide some cushion in the event of potential rate hikes under the current economic conditions,” it added.
Meanwhile, an analyst told StarBiz that AME REIT’s strongest structural advantage lies in its location whereby all of its industrial assets are in Johor, placing the portfolio directly within the JS-SEZ growth corridor.
He pointed out that Johor’s emergence as a manufacturing and logistics hub – supported by proximity to Singapore, the Rapid Transit System link and sustained foreign direct investment – should translate into stronger tenant demand, firmer rental rates and better tenant quality over time.
“AME-REIT’s appeal remains its combination of predictable industrial cash flow, acquisition-led earnings expansion and exposure to one of Malaysia’s strongest regional industrial themes,” he said.
RHB Research sees about 20% upside from current levels, while Kenanga Research maintains a “market perform” call with a target price of RM1.58, suggesting much of the near-term growth may already be reflected in the unit price.
